Watch for Legal Traps
When You Quit a Job
To Work for a Rival

By

Joann Lublin

Updated Nov. 6, 2007 12:01 a.m. ET

Ready to join a rival, you urge several subordinates and clients to come along. You assume you're safe because you lack a noncompete agreement.

Big mistake. Your poaching attempt may bring you big trouble. A growing number of companies sue job hoppers for luring staffers or customers while still employed there. Such lawsuits often claim breach of fiduciary duty. One financial-services concern waged a nasty court fight that stalled defections for months after a manager handed out applications for his new workplace during an office party shortly before he joined the competitor.

In addition, costly litigation over your pre-exit antics "can cast you in a bad light at your new employer," says Christopher Stief, head of the employee defection and trade secrets practice for Fisher & Phillips, a national law firm. "You don't want to have this happen to you.''

Even a threatening letter from your old bosses can jeopardize your move. "Just the whiff of a suit is enough to spook an employer," notes Allan Bloom, an employment law specialist for Paul, Hastings, Janofsky & Walker in New York. "I have seen offers pulled."

There are ways to avoid landing in legal hot water when you jump ship to a rival. Experts recommend choosing your words and deeds carefully from the outset of the courtship until you clean out your office.

Beginning with your job interview, never suggest how many loyal co-workers would tag along with you if you got hired. Some skittish businesses reject candidates for boasting about their ability to recruit teammates. "It would be a negative," the general counsel of a major high-technology concern says. "You question the ethics of that individual."

And don't reveal secret customer information to a hiring manager. You'd be safer -- and viewed more favorably -- describing your annual sales and commissions, without giving the exact number of sneakers you peddled to Foot Locker last year.

Brett Senior & Associates, a law firm in Conshohocken, Pa., sued accountant Stephen Fitzgerald last year soon after he quit and joined Fesnak & Associates, a Blue Bell accounting firm that Brett Senior considered a competitor. While discussing his possible employment, Mr. Fitzgerald showed several Fesnak partners a list of about 69 clients he served plus the fees paid by 48, the suit alleged.

Mary A. McLaughlin, a U.S. district court judge in Philadelphia, dismissed nearly all of the suit's charges this past July. Among other things, she said, Brett Senior failed to prove those client names and fees paid "were its property."

Still, Judge McLaughlin ordered Mr. Fitzgerald to stand trial on his alleged breach of fiduciary duty for calling 20 clients before he left. Fifteen clients followed him. He "conceded that at least some of these contacts were solicitations,'' her ruling noted. "An employee cannot solicit customers for a rival business."

In court filings, Mr. Fitzgerald denied any wrongdoing. He quit Fesnak six months ago for a better job and declines to comment on the case, according to his attorney Bruce E. Rodger.

You can steer clear of such legal troubles by keeping customers clueless about your new employer's identity. You shouldn't even announce your fresh title, phone number or email address before you resign.

As an extra precaution, conceal your departure plans from everyone at work except your supervisor. "Almost anything you say about your intentions to leave could cross that line,'' cautions Keith Wexelblatt, a senior counsel for Reebok International.

Other job hoppers get in trouble because they suddenly treat differently some subordinates they hope will follow them. "They try to take the distasteful things off the employee's plate" or overlook that staffer's mistakes, explains Steven L. Manchel, a partner at Manchel & Brennan, a law firm in Newton, Mass.

The confidentiality of your chats with an attorney vanishes, however, if you email her from work. "The minute you think of leaving, stop using the company computer" for personal matters, suggests a Washington trial lawyer who handles cases involving officials joining rivals.

Even bringing home sensitive documents during your final days could raise red flags. Bottom line: Leave your holiday card list at the office -- especially if it includes names of key customers that competitors don't know about.

You may woo former clients and co-workers once your new job starts as long as your efforts don't involve confidential information, Mr. Manchel says. He quit a Boston law firm 10 years ago to launch his own shop.

The day after he resigned, the lawyer recalls, "I informed my most significant litigation clients -- and they all continue to use me."

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